Official Luthiers Forum!

Okay, I just shipped an archtop guitar to Canada and am learning a HUGE lesson. There's a guy in Canada who has an archtop I wanted, and he wanted mine, so we decided to swap. They were both of equal value (about $4,000 U.S.). FedEx wanted $260 to ship it via the cheapest way possible, and it was only going about 350 miles away just northeast of Detroit (I'm in Indiana). I think this is crazy so I go to UPS and end up shipping it for what still seems like a huge amout ($110) to ship a guitar. At the same time, the guy in Canada gets a similar story from FedEx in Canada and also goes to UPS, but pays $195 (U.S.) to ship a package of identicle size the exact same distance. If this doesn't seem crazy enough, when the guitar arrives in Canada via UPS, the guy won't deliver it until he pays $95 in brokerage fees, and then another $450 in taxes. Needless to say we are both having heartattacks at the fees and taxes imposed on a simple trade. This swap ended up costing us over $750 for shipping and brokerage fees. While I love all our Canadian friends out there, I would seriously have to think twice before doing this again. Has anybody else ever heard of this? We both paid tax the first time we paid for the guitars, why should he have to pay it again in a swap?

John

Wow, that's an expensive trade! You guys should have driven towards each other and met half way to do the exchange in person....

Dave F.

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Cambrian Guitars

"There goes Mister Tic-Tac out the back with some bric-brac from the knick-knack rack"

As you are all well aware I ship and receive a lot from the US. Some of my best customers and suppliers are in the US. I ALWAYS try to ship Canada Post (becomes USPS once it hits the border). USP and other services have these HUGE add on fees once it hits the border.

Unfortunately, any items over $1600 shipped even with the postal service will require the use of a broker. I have a local broker that works well for me. I have accounts with UPS and FedEX and still find anyway I can not to use them! Driving it across the border would have been the best bet, you guys could have gone for dinner and had a few brewsky's and slept it off at hotel before returning home and still been ahead. It really sucks when a SERVICE is that expensive!

It is likely (and hopeful) the guitars are worth the sour taste and like all tastes, you will soon forget it's actual flavour but will not soon forget where it came from!

Shane

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Canada

That's why I only ship outside of the US via USPS! My customers in Canada demand that I use USPS, and now I'm glad I do! I'm so sorry to hear about this, I wish you would have asked here first. Bummer.

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Tracy
http://www.luthiersuppliers.com

Man Shane, I don't know how you can run a business having to pay those huge fees. I understand the brokerage fee(although I think what UPS charges is WAY too high), but what about the tax situation? Since the guy was giving up a guitar he paid tax on, and receiving a guitar of equal value, is he entitled to some type of credit from the Canadian gov't, or does he just get screwed on taxes? For example, when I bought a new truck last year, my trade-in was worth about $8,000. I only paid tax on the price of the truck minus the $8,000 trade-in. Shouldn't the guy in Canada get some type of break on the tax since it was an honest swap? The tax portion of what he was charged came to an amount of about $450.

Regardless, you guys are all right, I should have driven up to meet him and saved us both a ton of cash. I guess you can only laugh and learn. BTW, the guitar swap was a Gibson L-4 CES I gave him for a Sadowsky Jim Hall Signature model archtop in return. I hope I really like the Sadowsky when it arrives because I don't see myself paying huge fees again to reverse the swap.

Cheers!

John

USPS would have saved the brokerage(I also insist everyone use USPS as much as possible), but there's no way around the taxes. Since no actual money changed hands, he may be able to dispute it and get his taxes back, though. He can get the phone number in the blue pages... But for sure, the post office would have charged the same taxes; no way around it. Just have to pay, then try to get it back. That's why I have a warranty guy in the US(Bryan Kimsey), so folks won't send me their instruments back across the border; only in extreme cases(re-finish, for example) will I take one back, and even then, I'll have Bryan disassemble the guitar and only send the part that needs my attention <g>.

And yes, UPS Canada charges us more for the same service that UPS US would charge. One guitar, to Japan, runs me just short of $500! Nuts...., yet it goes from here to Ohio, to Alaska, then to Japan! The same package sent from anywhere in the US would cost a whole lot less....

Shipping is my 3rd largest business expense, and not far removed from 2nd..... Still, it's amazing what we can send, for so little.

What word does not work in this following set:

North American Free Trade Agreement

You can thank our betters in Washington and Ottawa for all that nonsense...

Rick T...

John, what he had to pay was the Goods and Services Tax (GST) a federal tax. And technically all we Canadians have to pay it on all new AND used items! As a company I have a GST # which means I can claim it back but there are a bunch of accounting issues around that and I am also required to collect it from my fellow citizens for each of their purchases and forward it to the government. At first blush it really appears to SUCK! But then when you sit down and think about it, it costs 'X' amount of dollars to run the country, we are a HUGE land mass (2nd largest in the world) and a small population (about 32 million as apposed to 302 million in the US) so our tax base will be high just to keep up the infrastructure. This particular tax was 11% on most goods in the early '80's but was buried so nobody really new about it. Today it is out in the open and is 5%. If the money doesn't come from these types of things, the government will just get it from another part of it's citizens pocket........

Our European friends seem to get around some taxes if the package is marked 'gift'. But that doesn't work here. As Mario states, even if it went through the mail the tax would have been collected. And as I mentioned, anything valued over $1600 gets delivered directly to customs who sends you a nice letter saying "get a broker and pay them money to pay us money you would have had to pay anyway and we will send you your goods" !! I just went through this last week, like I said I have a good broker so her fee was very reasonable to do this for me but if you don't do these things on a regular basis you are easy prey!

Just wish we could have helped sooner John.

Shane

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Canada

Rick you're misunderstanding those charges. Other than the shipping there are two charges. One charge is a tax from the Canadian government, we pay that on all goods new or used from Canada or not, so the Canadian government is treating this the same as a Canadian transaction. The other charge is an administration fee set by UPS - note the postal service will provide the same fee for $5 so you can form your own opinion about whether they are gouging or not.

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David White, Toronto

"All my favourite singers can't sing."

Since taxes are charged based on the value of the item written on the paperwork, in order to reduce taxes, well, you figure it out ....


The guitar is only worth 4300 because you said so .... you could have sold it for 150 bucks. Now, in reality, you likely wouldnt do that, but no one would stop you if you did right ???

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Tony Karol
www.karol-guitars.com
"let my passion .. fulfill yours"

John .. your story of buying the truck and getting a tax break on the trade-in forgets on thing. The trade-in vehicle is now going to be sold again by the dealer to someone, likely for more money than they gave you as a trade value, and if the tax laws where you live are like here in canada, there is full tax to be paid by that new buyer on the new price for the trade-in. The taxman gets his money (and more in this case !!!) one way or the other .. there is no provision in the law for 'honest' trades, with no taxes being paid, at least not here !!! In fact, here, even money made at garage sales is supposed to be added to ones taxable income ...

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Tony Karol
www.karol-guitars.com
"let my passion .. fulfill yours"

North American Free Trade Agreement

That has nothing to do with this, as no duties were collected. It's all just plain regular sales taxes collected. If the fella had purchased a $4300 guitar/sofa/stereo/used car/whatever in a store in Toronto, he'd have paid the same taxes.

Everything said so far is correct, and I'll add once again that our health care system is universal, not free.....

The flaw in that logic is insurance risk. You can't hardly declare a $150 value and insure it for $4300 without causing the customs officer to scratch his head.

You guys are acting like getting screwed over by taxes and mystery fees is something new!!

It's unfortunate that so many people especially here in Canada learn the expensive UPS brokerage
fees BS lesson from the UPS guy standing at your door with that package in his hand that you've
been waiting for weeks for him to finally deliver!! It would be nice if you knew about it ahead of time.

If you ship via any of the UPS air services into Canada the brokerage fee is waived. There's nothing you can do about the GST, it's on all transactions. However PST might be another matter. If you ever get audited for PST, don't mention this trade.

It's expensive doing business across borders, but IMO the Canada/US border costs are reasonable compared to other countries. I shipped a bass to a customer in Moscow, the bass cost a little under $6K and the customer had to pay $2000 in taxes and duties. That was on top of $900 in freight. I'm just glad he's happy with it.

I agree totally Larry .. but it doesnt say it was insured, so was it ????.. I dont know how it works in the US, but here the insurance aint free .... these guys (couriers) charge a LOT to insure stuff. Out of Canada, UPS is 3 bucks per hundered of value over 100 bucks ... .. so 30 per thousand .. so if it was insured at 4300, thats another 126 bucks added to the shipping costs. I pay that per YEAR to insure as many guitars shipped as I want, and for more value too ...

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Tony Karol
www.karol-guitars.com
"let my passion .. fulfill yours"

re: Driving guitar across the border to avoid sales taxes. Though it's nice to get together with friends across the border, this won't avoid paying sales tax on a guitar you 'swap for' in the US.

As a Canadian, re-entering Canada with a guitar (or dog, or router, or...) in the car, you can't get away with just saying : "Oh, it's mine-owned it for years- I was just in the states for a day visiting friends.." and expect to get away without paying sales taxes. The border authorities (I forget what they call themselves these days, it used to be 'Customs and Immigration') are perfectly within their rights to demand documentation like original sales receipts, showing that federal and (usually) provincial sales tax has been paid.
Because of this, lots of people stop at Canadian Customs on their way into the US if they are carrying things like guitars or camera equipment, and get some paperwork showing that the items entered the US from Canada. This paperwork can be shown to the agent when you re-enter Canada. There used to be a standard form (small blue card, if I recall) for this; I'm sure this has changed. Last year when I drove through the States on my way back from Sergei deJonge's course, I just provided details of my guitars on a sheet of paper and the Customs agent stamped it when I left Canada at the Sault. When I re-entered Canada at PeaceArch (WA-BC), the agent asked about the guitar cases, and I handed him the paper. No problem. (It does make it a bit easier if your signature is also on the neck block inside the guitar.)

I'm sure some of the Canadian pros here on the OLF who travel to shows in the US with guitars, could fill in more details.

Cheers
John

John, the little blue card is still the thing .. I just travelled thru the US from Canada with two guitars - I was away for a week, and had the card. On the return trip, I was not asked whether or not I bought them, or whether I even had the card .... just depends on who you get at the border.

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Tony Karol
www.karol-guitars.com
"let my passion .. fulfill yours"

Yes, I had insurance. I was shipping a guitar to an unknown fella who was also shipping a guitar back to me. I always purchase insurance, but in this case it was even more essential. The insurance was actually pretty cheap, only $9.00 per $1,000 insured.

I think the driving to swap would have worked out ok also. He would have declared a guitar when he came into the U.S. and had a guitar when he returned. Unless the customs guy opens the case and checks serial numbers, he's not gonna know. Plus the fact that the guy I traded with is a cop so so if anybody has an easier time, you'd think it would be him.

I guess all this is beside the point. We both did it totally legal on both sides and were just shocked at the additional expenses. He did BTW have to pay GST and PST before they would deliver the guitar.

Cheers!

John

Thanks for the education on shipping across borders. I had no idea this was happening and will make sure that I plan on this in the future. It just so happens that I have a comission on the books to a canadian customer who is going to pick up the guitar here in Florida. I'll make sure he is aware of the taxes he may be liable for when he returns home with it.

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Reguards,

Ken H

taxes that is how to get the "free" universal health care. No long lines just the good stuff

Stan, you have apparently never tried to get health care in Canada.

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David White, Toronto

"All my favourite singers can't sing."

Do you guys also pay an income tax up there in the not-frozen-for-too-much-longer-thanks-to-global-warming-North?

This is the equivalent of a VAT in Europe, right? Or sales tax here in California? And it goes on every transaction, be it wholesale or retail? Bump, bump, bump?

And try going totally without health insurance when in your early 60's for a while and love what you've got up there...

I do have HI now...or a very basic variety for nearly $600.00 a month right now...I'll be so happy to hit 65 this summer...

Rick-
We do pay income tax up here as well! (and mortgage payments aren't tax-deductible, but we don't pay capital gains on sale of our primary residences, etc etc)

There is a federal 'sales tax' on practically everything, called the Goods and Services tax (GST)- this is similar to the VAT.
On top of that, most provinces have (non-uniform rates of) provincial sales tax on goods transactions. So on a guitar bought locally, I'd pay GST+PST; on a haircut, only GST. Since I'm not a commercial vendor, I don't know how GST bookkeeping works on wholesale vs retail.
Charging PST & GST at the US border makes 'some' sense in protecting Canadian sellers from 'unfair' competition. Within Canada, it can be problematic with folks popping across to Alberta (no PST) to do their shopping. The buyer is 'honor-bound' to send in the PST to the local authorities- you can guess how well that works.
You have a similar, but more extreme situation in the US with state-registered boats- every time you move your boat to a different state, you have to pay the state sales tax on it, as I understand it. That's why a LOT of California boats are moored in BC rather than in WA.

Not to worry- income tax and all the others are only temporary measures to raise money to fight WW I- and will be cancelled soon!

Cheers
John

I'm puzzled (and a b it frighten, I've got to admit...) by what Mario said in this first message. When a US customer ships his guitar back to me (in Canada that is) for a repair covered by garantee, I'll have to pay taxes on the guitar as if I just bought it?!?! And then he will have to pay again when he get it back?!?!?

Please tell me it aint so...

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Alain Moisan
Former full time builder of Acoustics, Classicals and Flamencos.
(Now building just for fun!)